December 21, 2008

Why is it only people without money who are being expected to spend more?

I read on the BBC today that the IMF is urging governments to spend their way out of the current recession to the tune of $1.2 trillion. The head said “that given the choice between increasing the deficit and not fighting the recession, he favoured the ‘less bad solution.'” In other words all the world’s governments should spend money they don’t have in order to prevent a catastrophe. Here in Canada they are talking about a deficit next year of $1000 for every man, woman, and child in the country. Those of us who are responsible and have not spent our way into penury are being forced to spend money we don’t have at any event by our government. Where are those trillions coming from? Why don’t those who have the money spend it instead of those of us who do not have it and are trying to maintain a responsible economic posture?

It was spending money we don’t have that started this mess in the first place and now the only solution is to throw more wood on the fire? Ultimately, we need to see either rampant inflation of basic goods which will force people to spend money on things like food just to stay alive or we need to be nations of realistic spenders who do not spend more than we have. Getting everyone to buy more luxuries like digital cameras, GPSs, digital 1080p TVs and the like does not help the world. It might be suggested that it helps Best Buy employees (how much are they paid?) and factory workers in Taiwan or China (how much are they paid!) because we keep buying their goods and employ them but ultimately they are almost slave labourers dependent on huge corporations selling enough Blu-ray players. If the company does not then they are out on the street. How long can that go on?

There has been a lot of criticism about auto workers being paid $50-$70 an hour with benefits but think how much is spent on making a single movie. How many movies have $100 million plus budgets? Why are movie stars, sports stars, rock stars, CEOs, etc. worth thousands per hour or more? It has become so prevalent that we don’t question the numbers any more. They have become so BIG. It gets personal when you think about it though. The house I am currently renting a suite in is on the market for 1000x my monthly rent. With no interest it would take me over 80 years to buy this house at my current rate. Obviously I will be renting for a while. The fact is that inflation is much higher in Vancouver than advertised because housing costs are astronomical and their rise is based on nothing! Low interest rates and the idea that they will always rise like the stock market or movie budgets has pushed them far above what many people can afford.